How to Know If You Qualify for Chapter 13
Bankruptcy is a legal process that allows people in difficult financial situations to take control of their debt and start fresh. Chapter 13 bankruptcy is one of the most common types of bankruptcy for individuals and married couples in the U.S.
In a Chapter 13 bankruptcy case is individual reorganization where an individual or married couple with regular income develops a plan to pay off some of their debts. Chapter 13 allows you to keep your property and other assets while making payments in installments. Another advantage of Chapter 13 bankruptcy is the “automatic stay,” which prohibits your creditors from contacting you, suing you, repossessing your assets and foreclosing from the moment you file.
The length of a Chapter 13 repayment plan can is typically three to five years. If your current monthly income is less than the statewide median, your plan will typically last at least three years. If your current monthly income is more than the statewide median, your plan will typically last five years. Once you complete your court-approved repayment plan, most (but not all) remaining unsecured debts in your name are wiped clean. Student loan debt and criminal restitution debt is not typically discharged at the end of a chapter 13. There are also other debts that may not discharge.
Below, we answer common questions we receive about how to qualify for bankruptcy under Chapter 13, like “Am I eligible for Chapter 13 bankruptcy?”.
Chapter 13 Bankruptcy Eligibility Requirements
If you’re wondering, “Do I qualify for bankruptcy under Chapter 13?” here are the Chapter 13 bankruptcy eligibility requirements:
- You must have a regular income.
- The total value of your unsecured debts may not exceed $419,275. However, contingent and unliquidated debt does not count towards these amounts.
- The total value of your secured debts may not exceed $1,257,850.
- You must be current on filing your income taxes or else you will need to get any unfiled returns filed relatively soon after the bankruptcy case is filed.
- You must have completed a credit counseling course from an approved agency within 180 days before filing.
- In order to obtain a discharge in the chapter 13 case you must not have received a Chapter 13 bankruptcy discharge within the previous two years or a Chapter 7 bankruptcy discharge within the last four years. Keep in mind that there are certainly times when filing chapter 13 is appropriate even when it will not result in a discharge
- You must not have filed a bankruptcy petition within the past 180 days that was dismissed because you failed to appear in court, failed to comply with court orders, or voluntarily dismissed the case after a Motion for Relief from Stay was filed.
Requirements for Filing Chapter 13 Bankruptcy
If you are eligible for Chapter 13 bankruptcy and decide to file, you will be subject to the following requirements:
- You must submit documentation of your current financial affairs, including your assets, debts, income, and expenses.
- You must submit a certificate of a completed credit counseling course.
- You must submit a monthly income statement and details about estimated increases you expect in your income or expenses after filing.
- You must submit a copy of your tax return from the most recent tax year and any tax returns you file during the case.
- You must attend a meeting of creditors and answer any questions about the state of your finances and your proposed repayment plan. During the time of COVID, the meetings are conducted over the telephone and not in person.
- You must begin making payments to the court-appointed bankruptcy trustee within 30 days of filing, even if your plan has not yet been approved. In the Eastern District of North Carolina, the first payment comes due the 1st day of the next month after the case is filed.
Talk to Our Knowledgeable Chapter 13 Bankruptcy Attorneys in Cary, NC Today
Deciding to declare bankruptcy can be daunting, but you don’t have to approach this decision alone. The board-certified bankruptcy specialist attorneys of Sasser Law Firm have extensive experience handling all types of bankruptcy cases. We have filed handled over 9,000 cases, including cases involving Chapter 7, 11, and 13 bankruptcy. We can help you determine whether Chapter 13 may be right for you. Call us today at (919) 319-7400 or contact us online to learn more about your options in a free initial consultation.
- About the Author
- Latest Posts
For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.